RealtyTrac reports that during the third quarter, 20 percent of all U.S. home sales were of houses in foreclosure. Yikes! This is a big improvement from the previous year, when foreclosures made up 30 percent of residential sales, but in stronger housing markets (NYSEARCA:IYR) foreclosed homes have comprised less than 5 percent of sales.

A total of 221,536 distressed properties were bought in the third quarter, according to RealtyTrac. This is an 11 percent decrease from the previous quarter and 5 percent lower than the same quarter a year earlier.

RealtyTrac spokesperson Daren Blomquist said one reason for the decline is that banks are now being more careful with the processing and sale of foreclosures due to the robo-signing scandal, which slows down the process and limits the number of foreclosures on the market.

Here’s how homebuilders (NYSEARCA:XHB) are reacting to the news:

Lennar Corp. (NYSE:LEN): LEN shares recently traded at $22.19, down $0.61, or 2.68%. They have traded in a 52-week range of $12.14 to $23.11. Volume today was 2,885,577 shares versus a 3-month average volume of 6,256,040 shares. The company’s trailing P/E is 46.23, while trailing earnings are $0.48 per share.

Toll Brothers Inc. (NYSE:TOL): TOL shares recently traded at $22.47, down $0.76, or 3.27%. They have traded in a 52-week range of $13.16 to $23.68. Volume today was 1,487,926 shares versus a 3-month average volume of 4,111,280 shares. The company’s trailing P/E is 93.61, while trailing earnings are $0.24 per share.

KB Home (NYSE:KBH): KBH shares recently traded at $9.47, down $0.31, or 3.17%. They have traded in a 52-week range of $5.02 to $15.81. Volume today was 4,005,777 shares versus a 3-month average volume of 5,591,250 shares. The company’s trailing earnings are $-2.32 per share.

DR Horton Inc. (NYSE:DHI): DHI shares recently traded at $14.12, down $0.37, or 2.55%. They have traded in a 52-week range of $8.03 to $14.55. Volume today was 3,908,077 shares versus a 3-month average volume of 7,377,120 shares. The company’s trailing P/E is 61.39, while trailing earnings are $0.23 per share.

Ryland Group Inc. (NYSE:RYL): RYL shares recently traded at $18.42, down $0.68, or 3.56%. They have traded in a 52-week range of $9.15 to $19.41. Volume today was 1,060,570 shares versus a 3-month average volume of 1,513,420 shares. The company’s trailing earnings are $-1.59 per share.

To contact the reporter on this story: Gina Smith at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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